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 enlarge | Author: Mark Zandi
Publisher: FT Press
Category: Book
List Price: $24.99
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Rating:  89 reviews
Sales Rank: 3094
Media: Hardcover
Edition: 1
Number Of Items: 1
Pages: 288
Shipping Weight (lbs): 1.7
Dimensions (in): 9.1 x 6.1 x 0.9
ISBN: 0137142900
Dewey Decimal Number: 332.7220973
EAN: 9780137142903
ASIN: 0137142900
Publication Date: July 19, 2008
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| Customer Reviews:
Good Detailed Explaination for "How did this happen?" October 16, 2008
I was suspect when I first saw the title thinking that the author might be trying to exploit the current meltdown for personal gain. (This shows how synical and untrusting I have become since the onset of the subprime crisis). Instead, the author provides a very understandable, chronological account of how we ended up in this mess explaining the lending process, Fed decisions, securitization, & CDSs. The author assumes the reader has at least a basic understanding of the market, finance, and investment banking. The book can be a little repetitive and some of the charts aren't always very readable (due to the b&w, low res charts). Other than that, good job!
 Not the kind of book I usually read. October 16, 2008
2 out of 7 found this review helpful
I am not a big fan of any kind of non-fiction books. For me, they are painful to read - even the few non-fiction book I do happen to enjoy! I picked up Financial Shock in an attempt to better inform myself on the current financial crisis. I TRIED to be good and read something that would be informative and learning, but I just COULDN'T do it without either falling asleep or making my eyes bleed. (No, not really, but it felt that way.)
To its credit, I did glean some interesting information from this book, especially on the world wide financial front. I never realized how the world wide financial market worked and how much it is all so interdependent. Otherwise, this book basically points out how politics, greed, and gambling (that's how I see it whether it came from a business, Wall Street, Realtors, flippers, government, or the individual reaching for more than it can handle) ruined what otherwise was a fundamentally stable mortgage market. Not new news in that aspect for me. The insanity of the housing bubble was exactly that....INSANE. And I truly feel sorry for the innocent bystanders who ended up getting whip-lashed in the end.
Like I said before, Financial Shock is not my kind of read. I tried to but couldn't do it intensively page by page. Instead, I skimmed and read through some informative parts I wanted to know and briefly read parts that made my eyes roll. And I'll leave it at that.
 mainstream financial analysis October 15, 2008
1 out of 1 found this review helpful
Zandi gives a great look at the financial mess we are all caught up in right now, with a very heavy emphasis on the subprime craziness that triggered it all. While going into a certain amount of detail around the financial processes and market corruption involved, he stays well "inside the box" in terms of mainstream financial thought. He comes across as far more honest than the Chicago School's phony-free-market economic hitmen, but he doesn't wander far from the mainstream at all. Also, his solutions to avoid the "Next Financial Crisis" are mainly bullet points for those regulating (or rather, not regulating!) these markets. He offers no strategies for the guy/gal in the street.
While I enjoyed his discussion of all the convoluted scheming involved in the Escher-like stairway to economic collapse contrived by the people behind this mortgage mess, I couldn't help but feel that Zandi didn't go far enough in his investigation of the problem. Sure, all the leveraging of non-existent equity multiple times through multiple layers of finance bordered on outright criminal fraud, but what about the deeper circumstances/attitudes that drive the insane pursuit of stratospheric profit at all costs? (Pun intended.)
He does get the point that the problem was caused in large part by treating housing as an investment instead of housing (what I call "commoditizing" and he calls "securitizing"), and he gives housing "flippers" a good lashing. However, he never does really get to the matter of who benefits from this crisis. What is happening to all the assets being gobbled up in the fire-sale aftermath? A recent article on Marketwatch finally broached the subject of the winners who are grabbing up huge piles of financial assets at Wal-mart prices, something I have wondered about from the beginning.
He also dances all around the fact that the Federal Reserve is neither Federal nor a reserve - it is a consortium of private banks who profit from lending money to the government, and controlling national monetary policy in the process.
This crisis has all the earmarks of an engineered asset transfer, especially given the clockwork, kneejerk response of the stock market to the hesitation of the government to do the bailout. When he mentions that the very same thing happened years earlier in the manufactured home market, he sees it simply as a failed opportunity to heed a warning, failing to realize that it could very well have been a test run to fine-tune the process.
I find his work generally very good in the book, but I do have some issues with his attitude in places. His statement that credit is the "mother's milk" of the economic system is upside down - it is more like the opium of same; dangerous except under very strict use. Also, his idea that millions of people having mortgage debt constitutes wealth is simply nonsense. Having a mortgage is not ownership. Holding a clear title is ownership. Owing huge amounts of money based on severely over-pried assets is not wealth or ownership. It is a recipe for disaster. This highlights the problem of confusing value with price (or cost). To paraphrase, economists know the price of everything and the value of nothing.
His remark about the U.S. savings and loan calamity being due to industry mismanagement ignores the massive amount of evidence that it was really about drug money laundering for a global criminal enterprise, stealing assets, and covering those tracks than it was about bad business dealings. Again, one has to look deeper.
There are many good things in the book, and if you want a more detailed picture of the mechanics of the subprime collapse, this book will give it to you. If you are looking for some startling revelations about deeper causes or long-term solutions, look elsewhere.
Shockingly good October 14, 2008
This is probably the best book to read if you want to understand the how the current mortgage crisis came into being. What I really liked about the authors presentation of the material is that he doesn't "dumb down". He shows you the data and graphs and cites his references so you can assess if you agree with his interpretation. He doesn't balk at presenting and trying to explain some of the complex financial instruments that filled this bubble.
The title of the book tips its hat to Alvin Toffler's Future Shock and so Zandi does attempt a little crystal ball gazing in the final chapter. Though he raises concerns about bank liquidity, he gets it wrong in his statement that Bear Sterns bail-out represents the apex of the turmoil. This just goes to demonstrate how difficult prediction is, even for the very well informed.
An interesting and educational read.
 A good explaination of the financial meltdown October 14, 2008
If you turn on CNBC or any other financial news channel, we get bombarded with talks of hundreds of intellectuals on the sub-prime crisis and financial meltdown, but hardly anyone really explains the crux of the matter and how it all originated and what led to fiasco of this size
Mark Zandi has narrated the sequence of events, the companies, the people involved in the entire chain of events that led to this crisis. Next he goes on to explain how each regions of the world would get impacted by this crisis and how to prevent the next one.
The book is well written, excellent narration and feels like you want to read it through without going too much into financial jargon.
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